Ethereum: The Death of “Ultra Sound” MoneyThe Dencun upgrade has made ETH inflationary again

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Ethereum: The Death of “Ultra Sound” Money

The Dencun upgrade has made ETH inflationary again, sparking debates about the future of the "Ultra Sound" money narrative. Let’s dive into the details.

"Ultrasound money" suggests Ethereum could be a superior form of "sound money" compared to Bitcoin, aiming to decrease its supply over time through strategic upgrades like EIP-1559 and The Merge. Post-Merge, Ethereum seemed aligned with this narrative, even showing a slight reduction in total ETH supply.

However, the Dencun upgrade presents new challenges by reducing transaction fees and the ETH burn rate, leading to an increase in supply. This upgrade has decoupled Ethereum's transaction fees from network activity, reducing the burn rate even amid high activity.

While this results in lower user fees, it complicates the deflationary mechanism set by The Merge, now requiring significantly increased network activity to maintain deflation.

See our latest report for more!

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Create: 2024-05-10
Last Update: 2024-06-17 16:24:41

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Date: 2024-06-17| CryptoQuant

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